Every January, churches across the country scramble to figure out who needs a 1099. Some send them to everyone they paid. Others send them to no one. Most are somewhere in between, operating on instinct rather than policy. That scramble just got a little different -- because the rules changed.
The IRS has raised the 1099-NEC reporting threshold from $600 to $2,000. This change applies to payments made on or after January 1, 2025. If your church has been operating on the old $600 rule, it is time to update your process.
The threshold for Form 1099-MISC (used for rents, prizes, and other miscellaneous payments) has also increased to $2,000 under the same change.
What a 1099-NEC Is and When It's Required
Form 1099-NEC (Nonemployee Compensation) is the form used to report payments to independent contractors and other non-employees. If your church paid a person -- not a business -- $2,000 or more during the calendar year for services, you generally must issue a 1099-NEC to that person and file a copy with the IRS by January 31.
Common church payments that typically require a 1099-NEC:
- Guest speakers and preachers paid honoraria
- Musicians and worship leaders paid as contractors
- Graphic designers, web developers, and photographers
- Contractors for building maintenance or renovation work
- Counselors or coaches paid for services outside of employment
- Childcare workers classified as independent contractors
The $2,000 threshold is cumulative across the full calendar year. If you paid a contractor $800 in February, $700 in June, and $600 in October -- that is $2,100 total, and a 1099-NEC is required even though no single payment hit the threshold on its own.
What the New Threshold Means in Practice
The $600 threshold had been the standard for decades, and a lot of church processes were built around it. Here is what changes and what does not.
What changes: Contractors you paid between $600 and $1,999 in a calendar year no longer trigger a 1099-NEC filing requirement. A guest speaker you paid $900 for a one-time engagement, for example, would not receive a 1099 under the new rule.
What does not change: The underlying obligation to track contractor payments accurately, collect W-9s before payment, and make correct worker classification decisions. The threshold only affects the filing trigger -- the discipline around recordkeeping stays the same. Churches that stop tracking payments just because they are under $2,000 will find themselves underprepared when payments cross the threshold mid-year.
Our recommendation: Keep your W-9 collection and payment tracking process exactly as it was. The threshold change reduces your January filing burden -- it should not reduce your year-round recordkeeping.
Important Exceptions
Not every payment of $2,000 or more requires a 1099. The most significant exceptions:
- Payments to corporations. If the payee is a corporation (including an S-Corp), you generally do not need to issue a 1099-NEC. However, payments to attorneys are an exception -- you must issue a 1099 for attorney fees regardless of the business entity type.
- Payments via credit card or third-party payment networks. If you paid through PayPal, Venmo for Business, Square, or a credit card, the payment processor handles the reporting through Form 1099-K. You do not issue a 1099-NEC for those payments.
- Reimbursements under an accountable plan. Reimbursements for actual business expenses under a properly structured accountable plan are not compensation and do not require a 1099.
- Employees. People who are employees receive a W-2, not a 1099. This is a critical distinction -- and misclassifying employees as contractors is one of the IRS's top enforcement priorities. See our employee vs. contractor guide for details.
A Word on Ministers
Ministers present a unique situation. Most ministers who serve a single church as their primary employer are employees and receive a W-2. However, guest ministers, evangelists, and ministers who conduct weddings or funerals as independent services are typically contractors and receive 1099-NECs when their total payments reach $2,000.
For many churches, this threshold change means that a guest minister paid a single $1,500 honorarium no longer triggers a 1099-NEC. That said, if a guest minister speaks multiple times across the year and payments add up to $2,000 or more, the requirement still applies. Track the cumulative total -- do not evaluate each engagement in isolation.
The housing allowance is reported on a W-2 in Box 14 -- it is never reported on a 1099. If you are issuing 1099-NECs that include housing allowance amounts, that is a structure problem that needs to be corrected regardless of any threshold change.
Issuing a 1099-NEC to someone who is actually an employee does not protect the church from payroll tax liability. The IRS looks at the actual working relationship, not the form used. Churches that misclassify employees as contractors can face back payroll taxes, penalties, and interest -- sometimes reaching back several years. The higher filing threshold does not change this risk at all.
Collecting the Information You Need
To issue a 1099-NEC, you need the payee's legal name, address, and Taxpayer Identification Number (TIN) -- either a Social Security Number for individuals or an EIN for businesses. The right way to collect this is through Form W-9, which the payee completes and returns to you.
Best practice: collect a completed W-9 before making any payment to a new contractor. Do not wait until January to figure out who is missing information -- and do not let the higher threshold become an excuse to skip this step for smaller payments. A contractor you pay $800 in January might receive another $1,500 before year-end. You need that W-9 on file.
Chasing down W-9s in January is avoidable friction that causes churches to miss the filing deadline every year. Build the collection habit now, regardless of what threshold is in effect.
Filing Deadlines
For Form 1099-NEC, the deadline is January 31 -- both for providing copies to recipients and for filing with the IRS. This is a hard deadline. Late filing penalties start at $60 per form for filings up to 30 days late and escalate from there. The new threshold did not change the deadline or the penalties.
How Dime Handles This
We manage 1099 preparation and filing for every church client we serve. That means tracking payments throughout the year, maintaining W-9 records, applying the current threshold rules accurately, and filing on time -- including the IRS copy. We also flag classification questions when we see them so they get resolved before they become a compliance problem.
If your church has never had a consistent 1099 process, or if you are not confident that prior year filings were correct, reach out to our team. It is worth getting this right.